Monitoring the Monetary System and the Flow of Capital for Forecasting the Business, Financial and Currency Cycle - and Investing in the Emerging Economies from the Euro Global Reserve Currency - on lucabindi.com

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About Me

I am an
Italian 1.Economist that is 2.Catholic 3.Conservative Libertarian 4.pro-Market Economy
5.Classical-Keynesian 6.pseudo-Mercantilist 7.euro-pragmatic and disillusioned 8.pro UK-Italy-US 9.pro-cooperation with Russia 10.strategically protectionist for the core national industrial system.

I am
completing a PhD in Economics (Dr.rer.pol.) in
Switzerland, on the
“classical-Keynesian” school of thought.

The
research is focused on the functioning of the international monetary and
financial system, therefore on the commercial unbalances and the credit-based
fiat reserve currencies, under a fractional reserve banking system. The reform
proposal concerns the introduction of a correction system for the commercial
unbalances firstly proposed by JM Keynes – the “International Clearing Union” –
and one or two international reserve currencies that would be convertible into
real assets such as gold or other tangible goods. This for avoiding the
monetary inflation due to the creation of the fiat currency, with the
consequent manipulation of the exchange rates that impact on the distortions of
the commercial unbalances between productive economies and the non competitive
ones. – This model may be applied eventually to a cryptocurrency that may not
be inflated because available in a predefined limited amount. I expect a rapid
diffusion of the employment of the blockchain in the modern payment system
under development, in the course of the next decade.

I expect a capital inflow into the southern periphery of the eurozone, therefore raising the need for macroeconomic and financial consulting, namely to provide macroeconomic analysis also to support the inflow of financial capital into the southern periphery
of the eurozone from the other currency areas, that would be seeking a safe
haven into the eurozone for parking liquidity in a foreign investment – such as
the beautiful central Italy – from abroad.

Notwithstanding
the innate propensity to start a business project – possibly in the South East
Asia and in the East Africa – the excessive monetary expansion and lending of
credit in the aftermath of the introduction of the euro in 2002 have been
causing a wide inflation of the market value of assets therefore an excessively
onerous investment costs. The extremely low interest rates have favoured in the
years the accumulation of unproductive debt and blowing an unsustainable real
estate bubble, dependent on the lending rather than on the effective capacity
to generate income through production and the export of goods and services.

Indeed, quod erat demonstrandum, the
ultraexpansionary monetary policies adopted in the aftermath of the global
financial crisis of 2008-9 have revealed counterproductive if not detrimental
in respect of the stability of the economic system, such as its productivity
and international competitiveness. Supporting an economy in a debt deflation
and demographic crisis by reducing the interest rates – and keeping rates at
zero for a decade – thus expanding lending, other than monetizing the
deteriorated financial assets, was revealed counterproductive. As it was widely
foreseeable.

In fact I
share the approach of the Austrian economist Schumpeter and his “creative
destruction”, aspiring to a necessary normalization of the financial sector to
sustainable levels by the real economy.

On my
website lucabindi.com I presented my deductive* expectations on a
possible evolution of the economic and financial system, concluding with the
expectation for the next decade of a capital inflow into the eurozone
eventually favouring the periphery of the eurozone such as the economy of
Italy, similarly to what incurred during the years of the expansion of
the financial cycle for the Italian economy since the early years of the euro
adoption between 2002 and 2008.

*Deductive
because I proceed from the analysis of the general functioning of the
global financial system as a whole – essentially focusing on the commercial
unbalances between debtor and creditor economies – to recognize the expected
implications for the particular domestic economy of Italy.

Anyway, I
matured a solid consciousness of the complexity of the management of the
global macroeconomy and my thinking regarding the management of the trade
balances between surplus and deficit economies may be summarized as it follows.

During the
course of my macroeconomic studies, I gradually became aware that a global
market for trade allows an economy the accumulation of a structural surplus
only when another economy may fund its consumption
through foreign financing. This occurs especially in the case of an excessively
undervalued currency for the first and an alarmingly overvalued one for the
second, so that the former acquires additional competitiveness at the
international level for its exportable manufacturing goods, while the second
loses it.

It is my
profound understanding that the accumulation of a
remarkable commercial surplus is as embarrassing as the accumulation of a
chronic commercial deficit. Especially for the distortions that this may cause
in the global trade and in the allocation of production – therefore of
investment and employment – globally. And I also feel
uncomfortable for the accumulation of the Italian commercial credit that
is mainly due to the adoption of unprecedented
austerity measures for discouraging its domestic demand eventually for
reducing the import of foreign goods.

With
this I
mean that as it is the creditor that lends a loan to the debtor, if the
creditor lends an excessively destabilizing amount of credit to the
debtor for
funding its consumption of imported goods, then it is its own
responsibility –
rather than the sole responsibility of the debtor – to allow that the
debtor generates an additional income, through the exportable
manufactured goods, to be
addressed to the creditor economy. Otherwise a structural current
account
surplus has more the makings of predatory finance, rather than of a fair
international competition for a global and inclusive trade.

Indeed it
is my profound conviction that it is the responsibility of the net exporter
lender economy to support the recovery of its commercial partner, by adsorbing
the export of the exportable manufactured goods of the importer borrower
economy in order to rebalance its current account deficit. If this has to be
undertaken by the adoption of an expansionary fiscal policy to raise the
effective demand and imports or by a restrictive monetary policy to revalue the
domestic currency of the creditor economy, it is not the aim of the writer to
discuss this here.

Luca Bindi, LL.M. (Vaduz)

«I am
confident that the economy of the 2000-2100 century may be readdressed from
speculation to stability, with the introduction of a stable international monetary standard»

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The content is offered by the author with the sole informative purpose; moreover it is exposed without any guarantee and it does not constitute any form of investment advice. Any action undertaken by the reader on the basis of the content, analysis or opinion is intended to be under the sole responsibility of the reader.

No person may have any claim of any nature and in any case arising from or in connection with the information that is provided here by the author. The amounts, flows, stocks, values and dates that are provided are intended solely for indicative purposes and the author does not warrant the correctness, the accuracy and the completeness of the information that is provided here.

For omissions, mistakes or copyrighted material you are kindly pleased to inform the author by writing to info.emerginginvest@google.com

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Conditions:

The content is offered by the author with the sole informative purpose; moreover it is exposed without any guarantee and it does not constitute any form of investment advice. Any action undertaken by the reader on the basis of the content, analysis or opinion is intended to be under the sole responsibility of the reader.

No person may have any claim of any nature and in any case arising from or in connection with the information that is provided here by the author. The amounts, flows, stocks, values and dates that are provided are intended solely for indicative purposes and the author does not warrant the correctness, the accuracy and the completeness of the information that is provided here.

For omissions, mistakes or copyrighted material you are kindly pleased to inform the author by writing to info.emerginginvest@google.com